Tax Hike Referendum Resolution on Council Agenda

Listed on the agenda for this evening’s (Tuesday, March 6) Lawrence Township Council meeting is a resolution which, if approved by council, would authorize the township to hold a referendum asking voters to allow a municipal tax rate increase that would exceed the state’s 2 percent tax levy increase cap.

The meeting will begin at 6:30 p.m. at the municipal building at 2207 Lawrence Rd. (Route 206). A copy of the meeting agenda can be viewed by clicking here.

Such a referendum would be held April 17, in conjunction with the and .

The referendum would ask voters to approve a 9-cent increase to the municipal tax rate, in addition to a 5-cent increase already built into the proposed 2012 municipal budget.

The 5-cent hike would raise the municipal tax rate from $0.84 per $100 of assessed property value to $0.89, meaning that the owner of a home assessed at the current township average of $160,828 would pay about $1,431 in municipal taxes for 2012, or about $80 more than in 2011.

The additional 9 cents, if approved through voter referendum, would raise the municipal tax rate to $0.98 and add another $144.75 to the 2012 municipal tax bill, using the average home value of $160,828 for calculation purposes.

The likelihood of a referendum has been discussed ever since Lawrence Township Manager Richard Krawczun presented his and explained that the township had some tough financial choices ahead thanks, in large part, to a cumulative decline of more than $167 million to the township’s tax base due to successful tax appeals by commercial and residential property owners during the last five years, including a loss of $38.3 million during 2011.

At that Jan. 17 meeting, Krawczun explained that in order to raise the $42.35 million needed to fund township operations and services during 2012 and still comply with the state’s 2 percent tax increase cap, the municipal tax rate would need to be increased by 5 cents and 97 percent of the township’s available cash surplus – or $4,870,000 – would need to be used as revenue for the year

Having to use 97 percent of the surplus fund to balance this year’s budget would leave the township financially unable to respond to a natural disaster such as a hurricane or other unforeseen crisis, and would also create “catastrophe” in 2013 because not enough surplus would be available as a revenue source to help balance the 2013 budget, Krawczun has said.

Krawczun has told council he estimates it will be possible to “regenerate” about $2.6 million in surplus this year, through the collection of delinquent taxes, along with fines and interest, and “unanticipated” revenue like fines generated by the red light traffic enforcement cameras on Route 1. That, according to Krawczun, means the township can use an equal amount of surplus as revenue to balance this year’s budget. But in order to leave the remaining money untouched in the surplus fund this year for use later in 2013, the township must find another way to plug the resulting $2,275,000 hole.

With that in mind, , Krawczun explained how the additional 9-cent increase, approved through a referendum, would generate the money needed to balance the budget and preserve the surplus fund.

If voters reject the referendum, the township council can either implement a plan that would lay off 36 township workers, including eight police officers and all ambulance personnel, or adopt one of two trash alternatives Krawczun presented to council on Feb. 7.

Under those two scenarios, the township could save money – and, in turn, balance its 2012 budget – by removing the cost of trash collection from its operational expenses. But such a move would cost the average Lawrence Township taxpayer more than the referendum option.

Currently, trash collection and trash disposal “tipping” fees are paid by the township through its municipal budget, with the costs being shared equally – through the collection of municipal taxes – by both homeowners and commercial property owners, even though commercial properties do not benefit from the trash collection services.

Under the first of those scenarios, the “solid waste utility” option, residential trash collection in Lawrence Township would continue to operate as it currently does – with the services provided by a contracted trash company – but the funding for trash collection and disposal would come not from taxes but from a separate fee assessed against homeowners; homeowners would receive a separate bill from the township for trash service, much like they currently receive a bill for sewer service.

The other option would see township homeowners shopping around for their own trash vendor – similar to how they would choose a cable television provider – and entering into individual contracts for trash service with that vendor.

In both of those cases, commercial property owners would not share the cost of trash collection, as they currently do through their payment of municipal taxes.

If voters pass the referendum option, the average homeowner would pay about $144 more per year or $12 more per month as a result of the added 9-cent tax rate increase. Under the “solid waste utility” option, the average homeowner would pay about $336 more per year or $28 more per month, and under the individual trash subscription option the average homeowner would pay $360-plus more per year or $30-plus more per month.